How to measure the ROI in
Measuring the ROI of a social media
project is like the Holy Grail of online marketing;
everybody is searching for it but only few have seen the
light of wisdom. In principle it should not be difficult at
all to measure your ROI. You just have to do what you have
always done: plan your project well with clear defined goals
and KPI’s and then measure those KPI’s. So, what is so
difficult about it?
media is different
Well, your first problem is that you are trying to compare
apples with pears. Return on investment is a financial
measurement, while social media programs are emotional.
Therefore it is not possible to determine the ROI of your
Your second problem is that in general marketing campaigns are
limited to a certain period, which enables you to measure the
ROI over that period. Social media projects however tend to be
ongoing. You cannot just tell your customers you are going back
to your former ivory tower behaviour after you “finished” your
project. You can of course look at your sales and see what
happened during the period you first started with social media,
but there are so many more factors involved that this can only
give you an indication.
And your third problem is that you are still thinking as a
marketer; as a brand manager. Social media is the total online
presence of your customers, talking about you and expecting
total transparency and an excellent customer service from you.
(Do not think you cannot afford to be totally transparent,
because if you will not be transparent, then your customers will
make sure they create it themselves!) This means, you should not
aim for a financial ROI, but for a social success through an
excellent customer service.
Hence you will have to accept that with your social media
campaign you need to focus on measuring the social impact; the
relationship you build with your customer and accept that this
will directly influence your sales.
How to measure your social impact?
There are two sorts of KPI’s you can measure online with your
social media campaign: volume and engagement. Volume consists of
number of fans or followers, tweets per minute, trending topics,
etc. Engagement consists of overall sentiment and comments: the
time people spent with your brand, number of Retweets, number of
subscribers to your eMails, persistence of your message,
customer loyalty, etc.
Measuring the volume can be done with normal analytics programs
or is directly mentioned on your social media websites. For
example Facebook tells you how many “fans” you have. Measuring
engagement is a lot more difficult and you will need a special
program to do this. In general you will not have sufficient
human resources to measure engagement yourself, so you will need
to contract a third party who will use a program like Radian6 or
Nielsen Buzzmetrics to measure your social media impact for you.
Let’s try to determine the ROI anyway
Say you are not completely convinced by what I told you above
and you want to try to measure your financial ROI anyway. The
first step you need to take is to determine your social media
strategy: What are you doing there? What do you hope to
accomplish? In short: What are your KPI’s? Make sure you choose
benchmarks that you can measure over time, or if possible create
actions that show you if people bought your product or not.
You will probably have to accept that the KPI’s you can measure
will be mainly KPI’s of “engagement”, but that does not mean you
cannot measure your influence on sales. As social media
campaigns function over longer periods, it will be easier to use
correlation. You could measure the emotional impact of your
program and correlate this impact with your sales increase over
the same period and thus have a good idea of your social media
Do you have experience with measuring the ROI of your social
media projects? Then lets discuss a bit further!